Real Estate Math
A Montana property has an NOI of $42,000 per year and a cap rate of 7%. What is the estimated market value using the income approach?
A$294,000
B$600,000✓ Correct
C$420,000
D$2,940,000
Explanation
Value = NOI / Cap Rate = $42,000 / 0.07 = $600,000. To solve this, multiply the relevant values: $42,000 at 7%.. The correct answer is $600,000.. This is a common calculation on the Montana real estate exam.
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